The year 2021 could be a record year for Chinese companies aiming at US capital markets. After a fantastic 2020 and the highest amount of funds raised since 2014, Chinese IPOs had a strong start in the half of this year.
According to data presented by Buy Shares, Chinese companies raised a record $12.5bn in 34 IPOs in US capital markets, more than in the entire 2020.
Total Amount of Funds Raised in IPOs Surged by 557% YoY
The management of a private company has a lot of control over its operation. However, raising funds from investors is more complicated. To access funds from regular investors, companies go public by offering stock shares at a certain price. As a result, they get more capital to work with.
The US capital markets have been a lucrative source of funding for Chinese companies in recent years, especially for tech firms looking to benchmark their valuations against listed peers. Many of them kept their enthusiasm for US markets in 2020, despite turbulent relations between the world’s two largest economies.
The Renaissance Capital data showed that last year, China-based companies raised $11.7bn through a total of 30 initial public offerings in the United States, the highest amount of capital since 2014 when Alibaba went public as the biggest IPO to date.
However, 2021 set a new record, despite the tensions between the two countries and Washington’s threat to delist companies that do not comply with US accounting rules. Statistics indicate that between January and June, there have been a total of 34 Chinese IPOs in the US capital markets, 20 more than in the year-ago period. Also, the total value of funds raised hit a record $12.5bn, a massive 557% increase year-over-year.
DiDi’s $4.4B Listing Largest Chinese IPO in the US since 2014
In 2014, Alibaba Group raised $21.8bn on the first day of trading and remained the largest IPO in the United States ever. Statistics show that five out of ten largest IPOs by Chinese companies on the US stock exchanges that happened since then all took place in the last year.
Lufax, KE Holdings (Beike), and Xpeng were listed in August 2020, while Full Truck Alliance and Didi Global made their debuts in the US amid the volatile IPO environment in June 2021.
Both IPOs happened at a time when the United States has been tightening the regulations for the listing of Chinese companies on the US stock exchanges, and Chinese regulators intensified the antitrust campaign.
Despite that, Didi raised $4.4bn which raised its valuation at $68bn, marking the second-largest US listing by a Chinese company since 2014.